Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
SUBJECT: PROMOTER TAX SHELTER "IN THE COURSE OF A BUSINESS" SECTION: 237.1]
5-920185
XXX Franklyn S. Gillman
(613) 957-8953
Attention: XXX
May 27, 1992
Dear Sirs:
Re: Subsection 237.1(1) of the Income Tax Act (the "Act") Definition of promoter'
This is in reply to your letter dated January 14, 1992 wherein you requested the Departments interpretation of the meaning and significance of the words "in the course of a business" as they relate to the use of the word "promoter" in Subsection 237.1(1) of the Act.
We apologize for the delay in replying to your request.
It is a question of fact as to whether a person is "in the course of a business" of selling, issuing , etc .... Each particular situation would have to be dealt with separately according to its own particular set of facts.
When attempting to deal with a particular situation, one should refer to Subsection 248(1) of the Act where the word "business" is defined to include a profession, calling, trade, manufacture or undertaking of any kind whatever and, ..., an adventure or concern in the nature of trade but does not include an office or employment.
The Department has in the past attempted to give some direction to aid in the determination as to whether a person is a promoter. In the 1988 Conference Report of the Canadian Tax Foundation in the Revenue Canada Round Table - Questions from the floor at Q. 14, at page 53:78, the Department indicated that:
A lawyer or accountant who advised the organizer of a tax shelter in respect of the sale, issuance or acquisition of an interest in a tax shelter normally would be included in the definition of a promoter under subsection 237.1(1). The lawyer or accountant would also be included if the advising of investors amounted to the promotion of the tax shelter.
Where the lawyer or accountant is merely giving advise to a client who proposes to invest in a tax shelter, the lawyer or accountant will not be affected by the reporting requirement of subsection 237.1(7). If the lawyer or accountant is promoting the shelter and thereby recruiting investors, however, it is appropriate that an information return be filed unless it is known that this has already been done by the vendor or vendor's agent.
The Department has also commented on the meaning of business in Interpretation Bulletin IT-459 entitled "Adventure or Concern in the Nature of Trade'. As indicated therein, the fact that a particular activity is done only once would not preclude the possibility that the person performing the activity is engaged in a business transaction, and therefore could be considered to be acting in the course of a business.
Furthermore IT-459 states that in determining whether a particular transaction is to be considered a business, all the facts and circumstances must be considered.
We trust that our comments have been of assistance. for Director Manufacturing Industries, Partnerships and Trusts Division Rulings Directorate
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